The dilemma of Southeast Asian PP market

Over the past week, the propylene cost based on FOB Korea term has surged $95/ton compared to earlier this month, touching the highest levels in a year on tight availability. This appears to be a good news to homo-PP sellers, who has been searching for support to revive market prices from the recent downtrend. And some did.  

In fact, a major Indian producer lifted homo-PP prices as much as $50/ton week over week reaching $1040/tom CIF Vietnam, LC AS term just when the week begins. Suppliers for Thailand and Vietnamese homo-PP have also implemented a humble increase of $10/ton on their cargoes to Indonesia this week to reflex higher production costs. The downside is that buyers are simply not responding to the new price levels with the availability of stable offers in the market.

A Vietnamese trader informed, “It is really confusing as market is moving asynchronously. We are still receiving offers for non-dutiable homo-PP cargoes at well below Indian material this week. At the meantime, domestic distributors are cutting prices for locally produced cargoes which hampered buyers confidence just when market started to pose more optimistic expectation for September.”

All eyes are on September at the moment for the fact that this is the start of the traditional high demand season. Most converters in eastern China resume production after the G20 Summit shutdown would find themselves in the position to restock cargoes. An international trader added, “European buyers have ended their summer break, that means demand in this market would improve as well.” However, September is just couple of days away, and regional buyers still prefer to be on the side-line until all clouds being clear.

A regional trader commented, “For the immediate term, we think market might not going anywhere despite firm upstream and positive expectation. We think the aim of sellers lifting prices this week is to test market respond. More movement might only come by the second week of September.”